View full sizeBenjamin Brink/The OregonianStarbucks announced its plans to move Tazo Tea from its Portland base, at 301 S.E. Second Ave., to an expanded plant in Kent, Wash.

Correction appended.

Starbucks will uproot Tazo Tea's Portland operations within the next year, deciding more than a decade after it bought the brand to move production to Kent, Wash.

The Seattle coffee giant said Tazo Tea's inner eastside spot wasn't big enough to meet the growing demand for the tea. As part of the move, it's spending millions to expand and upgrade the Washington plant, which will help streamline and expand its operations.

It's all part of Starbucks' strategy to grow Tazo Tea from a $1 billion business and tap into its worldwide market potential, spokesman Alan Hilowitz said.

Still, the move represents another loss for Oregon, which has seen a string of buyouts and relocations by out-of-state companies.

Tazo's Portland footprint has gradually decreased since rumors started swirling of a possible move more than two years ago. Its top offices moved to Seattle, leaving behind only its manufacturing functions.

The decision to move, "was truly based on business needs," Hilowitz said. "It's a brand we're looking to put some muscle behind to grow in the future."

It was Portland entrepreneur Steve Smith who transformed Tazo from kitchen startup to a global brand known for its quirky blends of international teas. In 1999 and five years after its launch, he sold it to the Seattle-based coffee seller for a reported $9.1 million.

He now heads Smith Teamaker, a small-batch, loose and ready-to-drink tea company based in Northwest Portland.

"I suppose for Starbucks it's the logical thing to do," said Smith, who's kept in touch with many Tazo employees. "For the community over there, it's sad and unfortunate."

Employees learned about the decision Tuesday morning.

The company's 37 workers received job offers and relocation packages, Hilowitz said. Anyone who wants to stay in Oregon will receive severance packages or jobs with Portland-area Starbucks.

Starbucks expects to begin the move in April and finish the following November.

Rumors of a possible move surfaced in 2009, when Mayor Sam Adams said he would do whatever he could to persuade Starbucks to keep Tazo Tea headquartered in Portland. At the time, he vowed to ramp up talks in the hopes of helping the company find a better Portland location. "I'll go up to Seattle," he said. "I'll do whatever it takes."

But his tone had changed by Wednesday morning, when he responded to a tweet asking what he had done to keep the company in town. "First offered help 3 yrs ago... sad. But we have many other homegrown tea-sters," he wrote.

He didn't return a call from The Oregonian, but his spokeswoman sent a written response.

"I am disappointed by Starbucks' decision to consolidate Tazo's operations, but I am glad to hear Starbucks is offering to relocate Tazo's current employees to its Seattle facility."

Randy Miller, Tazo's Portland landlord, confirmed that Adams tried to persuade Starbucks to keep Tazo here. Tazo moved in 2001 from Southeast Eighth Avenue and Division Street to its current central-eastside headquarters at 301 S.E. Second Ave., where it occupies about 80,000 square feet on one level in two buildings.

Miller, the president of Produce Row Property Management Co., laments the departure and not just because of the vacancy.

"It's just that Tazo's so much a part of the ethos of Portland," he said. "But who we are is of no consequence, no concern to them. It's really nothing Tazo wanted, that's for sure."

Miller said Starbucks' lease extends to Jan. 1, 2013.

But one local business advocate predicted the empty space wouldn't last long. The area has long been an incubator for new and growing businesses, said Terry Taylor, executive director of the Central Eastside Industrial Council.

"It will open up opportunities for new businesses to come in," Taylor said. "It's prime area. Access to downtown is great."

Portland's coffee-centric community remains an important market for Starbucks, Hilowitz said.

"Portland's where Tazo was born," he said. "The personality of the Tazo brand has taken a lot from the culture of Portland."

Starbucks operates more than 60 stores in the metro area and plans to open as many as 10 more in fiscal 2012, which started this month.

All of the stores sell Tazo Tea.

"Seeing a company I started be successful is great," said Smith. "Seeing a company that I started picking up and leaving town -- it's hard to articulate."